Strong rise in construction output in April

Recovery now evenly balanced across the house building, commercial and civil engineering categories

UK construction companies signalled a strong increase in output volumes during April, with continued recoveries in civil engineering activity, commercial work and house building boosted by the fastest rise in overall new orders since September 2014.

The headline IHS Markit/CIPS UK Construction PMI Total Activity Index posted 61.6 in April, down only fractionally from March’s six-and-a-half year peak of 61.7. With any figure above 50.0 indicating an overall expansion of construction output, the index has posted in growth territory in 10 of the past 11 months, with January 2021 being the exception.

Commercial work (index at 62.2) was the best-performing broad category of construction output in April, although the rate of expansion eased slightly since March; civil engineering (index at 61.5) bucked the softer overall growth trend in April and signalled its fastest speed of recovery since September 2014; whilst house building (index at 61.2) continued to rise at a strong pace in April, although the rate of growth eased from March’s recent peak (64.0).

Total new work increased for the eleventh consecutive month in April. Moreover, the latest improvement in order books was the strongest for just over six-and-a-half years.

However, a rapid rise in demand for construction products and materials continued to stretch supply chains in April. The latest lengthening of suppliers’ delivery times was the third greatest since the survey began in 1997, exceeded only by those seen during the lockdown in April and May last year.

Nevertheless, looking ahead, construction companies remained highly upbeat about their growth prospects in April. More than half of the survey panel (57%) expect a rise in business activity during the next 12 months, while only 7% forecast a decline.

Tim Moore, economics director at IHS Markit, which compiles the survey, said: ‘The UK construction sector is experiencing its strongest growth phase for six-and-a-half years, with the recovery now evenly balanced across the house building, commercial and civil engineering categories.

‘New orders surged higher in April as the end of lockdown spurred contract awards on previously delayed commercial development projects. This added to the spike in workloads from robust housing demand and the delivery of major infrastructure programmes such as HS2.

‘Shortages of construction materials and much longer wait times for deliveries from suppliers were a sting in the tail for the sector. Aggregates, timber, steel, cement and concrete products were all widely reported as in short supply by survey respondents.’

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: ‘The building blocks were in place in April as builders confirmed more work, more job opportunities and strong optimism for the next 12 months.

‘The overall growth rate of new business strengthened to the fastest since September 2014 as all three sectors improved and civil engineering, the laggard of last, year gained the most momentum.’